RICARDO, DAVID ( ,1772-1823), English economist, was born in London on April 19, 1772, of Jewish origin. His father, who was of Dutch birth, was a successful member of the Stock Exchange. In 1786 Ricardo entered his father's office, where he showed much aptitude for business, but in consequence of his adoption of the Christian faith about 1793, when he married Miss Wilkinson, he was separated from his family and thrown on his own resources. He continued a member of the Stock Exchange and by 1797 was sufficiently wealthy to be able to turn to scien tific pursuits; but, having read Adam Smith's great work, he threw himself into the study of political economy.
His publication of a tract on The High Price of Bullion, a Proof of the Depreciation of Bank Notes, in 1809, gave a fresh stimulus to the controversy respecting the resumption of cash payments, and indirectly led to the appointment of a committee of the House of Commons, commonly known as the Bullion Committee, to consider the question. The report of the committee confirmed Ricardo's views, and recommended the repeal of the Bank Re striction Act, but the House of Commons declared that paper had undergone no depreciation. In 181r he met James Mill, who, while influencing Ricardo politically, was under obligations to him in the economic field. Mill said, in 1823, that he himself and J. R. M'Culloch were Ricardo's only genuine disciples.
In 1815, when the Corn Laws were under discussion, Ricardo published his Essay on the Influence of a Low Price of Corn on the Profits of Stock, directed against a tract by Malthus entitled Grounds of an Opinion on the Policy of Restraining the Free Importation of Foreign Corn. His arguments were based on the theory of rent, which, as Ricardo admitted, had been clearly enunciated by Malthus in his Inquiry into the Nature and Progress of Rent, and which had earlier been stated by Anderson. In this essay are set forth the essential propositions of the Ricardian system, such as, that an increase of wages does not raise prices; that profits can be raised only by a fall in wages and diminished only by a rise in wages; and that profits, in the whole progress of society, are determined by the cost of the production of the food which is raised at the greatest expense. These ideas were afterwards incorporated in the Principles of Political Economy.
In the field of the theory of banking and currency some of Ricardo's best work appears. His main ideas are expressed in three pamphlets: (I) The High Price of Bullion (ado), in which he discusses the available means of testing the value of paper money, and the power of the Bank of England to regulate the supply. (2) Proposals for an Economical and Secure Currency (1816), in which he elucidates the quantity theory, and pro nounces in favour of a mono-metallic standard. (3) A Plea for a National Bank (1824), which was, in fact, an indictment of the methods of the existing bank, particularly in connection with its issue of paper money.
Ricardo's chief work, Principles of Political Economy and Tax ation, appeared in 1817. The fundamental doctrine of this work is that, on the hypothesis of free competition, exchange value is determined by the labour expended in production. Ricardo's theory of distribution has been briefly enunciated as follows : "(I) The demand for food determines the margin of cultivation; (2) this margin determines rent; (3) the amount necessary to main tain the labourer determines wages; (4) the difference between the amount produced by a given quantity of labour at the margin and the wages of that labour determines profit." These theorems require much modification to adapt them to real life. His theory of foreign trade has been embodied in the two propositions : "(I) International values are not determined in the same way as domestic values; (2) the medium of exchange is distributed so as to bring trade to the condition it would be in if it were con ducted by barter." A considerable portion of the work is de voted to a study of taxation, which requires to be considered as a part of the problem of distribution. A tax is not always paid by those on whom it is imposed ; it is therefore necessary to determine the ultimate, as distinguished from the immediate, inci dence of every form of taxation. Smith had already dealt with this question. Ricardo, in developing and criticising his results, arrives at the conclusion that a tax on raw produce falls on the consumer, but will also diminish profits; a tax on rents falls on the landlord ; taxes on houses will be divided between the occupier and the ground landlord ; taxes on profits will be paid by the consumer, and taxes on wages by the capitalist.